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The build I am currently doing was a barreled kit for $309, a $65 receiver (call it $100 with shipping and transfer), and a $25 FCG (which I bought 'ship to store' from Walmart.com ). Should come in under $450 all together.
There seems to be a ton of AKs in the dealer ads for $500. Unless you have access to the tools, I agree it's cheaper to buy one.
But if you really want to build one, it is definitely worth the effort.
http://www.classicfirearms.com/amd65partialbuildproject762x39A barrel and rivet tools which usually consist of jigs.
If you don't plan on building at least 3 or 4, it's cheaper to buy. Kits aren't cheap anymore.
Pretty much ruled out building any one got a beater they wanna sell lol
If you just want an AK / new range toy, buy one.
If you enjoy tinkering and building things yourself, are mechanical inclined, and are always looking for an excuse to buy more tools, build one.
I built mine and after all the tools and time it definitely wasn't the cost effective way to go, probably broke even. But it was fun (and frustrating at times), I like the look on non-gunners faces when I tell them I built an AK, and it gave me a great familiarity with the firearm.